`

2015 WSSFC Quality of Life/Ethics Track –

Session 5

Lawyers on the Move Moderator:

J. David Krekeler, Krekeler Strother S.C., Madison

Panelists: David P. Leibowitz, Law Offices of David P. Leibowitz, Waukegan, IL

Michael J. Olds, Kopp McKichan LLP, Platteville

About the Presenters...

J. David Krekeler founded his own firm in 1982 and has grown his firm from 2 people to more than 30. He has made a lot of mistakes along the way and will share what has worked for him and what has not. Mr. Krekeler devotes his practice to debtor-creditor, bankruptcy, collections, and foreclosure and consumer matters. His practice includes representation of debtors, creditors, trustees and committees in cases under Chapters 7, 11, 12, and 13. Mr. Krekeler is Board-Certified in Business Bankruptcy Law by the American Board of Certification, and is chairman of the Bankruptcy Insolvency Creditors Rights Section of the State Bar. He serves on the Consumer Protection Advisory Council for the Department of Agriculture, Trade and Consumer Protection. He has been named to both The Best Lawyers in America and Super Lawyers for the past 8 years. He has authored numerous articles on bankruptcy and collection, including leading education a seminars on these topics. David P. Leibowitz. David Leibowitz is founder of Law Offices of David P. Leibowitz, LLC (Lakelaw) with offices in Milwaukee, Kenosha, Waukegan, Illinois and Chicago. He is also general counsel of Upright Law, a national consumer bankruptcy firm with headquarters in Chicago and practicing throughout the United States. He is past-co-chair of the American Bankruptcy Institute's Commercial Fraud Committee as well as its Consumer Bankruptcy Committee. He has served as a bankruptcy trustee in Chicago for more than 25 years, has been in practice more than 40 years and is a cum laude graduate of Loyola University of Chicago School of Law. Mr. Leibowitz is a frequent speaker at national, state and local bankruptcy conferences. He is a member of the Planning Committee for the ABI Chicago Consumer Bankruptcy Conference and has addressed ethics at this conference on several occasions. Michael J. Olds is the managing partner of Kopp McKichan, LLP in Platteville, WI. Mr. Olds primary practice areas are bank and business law. He is general counsel for many of the local banks, and represents dozens of small to multi-million dollar and multi-state businesses with respect to their organization, transactions and litigation. Mr. Olds is also a court commissioner in Grant County. He has been a member of the James E. Doyle American Inn of Court for twenty-one (21) years. Mr. Olds previously served as chair of the State Bar committee that rewrote the current trust account and credit card rules. He currently is a member of the Insurance and Member Benefits Committee for the State Bar.

Page 1 of 3

MOVING ON

I. OVERVIEW/BACKGROUND

As of 2010, our firm consisted of five (5) partners, three (3) associates, one (1) paralegal, one (1)

paid intern and one (1) paid legal clerk. We were and remain largely a "full" service law firm where

partners specialize or focus their respective practices each in limited areas of the law. In Spring of 2010,

the partner who led our personal injury/contingency fee backed practice chose to leave our firm. This

resulted in a major restructuring because the remaining partners felt that it was economically unfeasible

to retain the two (2) associates and one (1) intern focused on that practice.

II. DUTY TO CLIENTS

a. The separating lawyer(s) and the firm's duty is to protect the clients who may be

impacted by that separation. Under SCR 20:1.16 concerning Declining or terminating representation, it

states as follows:

" (d) Upon termination of representation, a lawyer shall take steps to the extent reasonably

practicable to protect a client's interests, such as giving reasonable notice to the client, allowing time

for employment of other counsel, surrendering papers and property to which the client is entitled and

refunding any advance payment of fee or expense that has not been earned or incurred....."

SEE Exhibit A.

b. Application of SCR 20:1.16

1. Though the firm and lawyer(s) have a separate duty to inform clients of the

separation, the separating lawyer(s) have an unwritten duty to inform the remaining lawyers BEFORE

informing clients. That notice should be in writing.

a. Coordination of notice to clients; and,

b. Minimize the risk that the remaining lawyers (firm) or a client will sue

the departing lawyer(s) for improper solicitation, failure to perform, or based on

some fiduciary duty that a departing lawyer may have to the law firm. (SEE

"Leaving a firm: The departure and other ethical considerations" dated

8/18/2010 and quoting Tim Pierce")

2. NO ONE OWNS THE CLIENTS!! Under SCR 20:1.4 concerning Communication

[with client], it states as follows:

"(a) (3) keep the client reasonably informed about the status of the matter; ..."

Thus, each side should write a departure letter to the clients that the departing lawyer(s) are largely

responsible. That letter should be neutral and simply inform the clients of the departure and of the

options available to the client. The standard letter includes the following: (1) the departure date; (2)

Page 2 of 3

the new address of the departing lawyer; and (3) the following options available to the client: (a) depart

with the lawyer(s), (b) stay with the firm, or (c) seek other counsel. SEE ATTACHED SAMPLE LETTER.

3. LIKEWISE, THE CLIENT DOES NOT OWN THE FIRM!!! If you are choosing not to

continue your relationship with the client, then you should remove that as an option available and

provide the client reasonable time to obtain additional counsel SEE SCR 20:1.16(d).

4. The client owns the file. You can't hold it hostage!

III. TRANSITION

a. Valuation

1. Partnership Agreement -- You should have one that includes a valuation system

and buy out method.

2. Ownership Interest of Tangibles*

a. Account Receivables -- Discount ?

b. Hard Assets

*Are there debts?

3. Ownership Interest Contingency Cases

a. Law -- See attached Memo Re: Partnership Dissolution. Most

jurisdictions appear to say that the fees from these cases belong entirely to the old partnership even if

resolved post dissolution.

b. Ethical Dilemma

1. SCR 20:1.5 Fees. (a) A lawyer shall not make an agreement for, charge, or

collect an unreasonable fee or an unreasonable amount for expenses. The factors to be considered in determining the

reasonableness of a fee include the following: (1) the time and labor required, the novelty and difficulty of the questions

involved, and the skill requisite to perform the legal service properly; (2) the likelihood, if apparent to the client, that the

acceptance of the particular employment will preclude other employment by the lawyer; (3) the fee customarily charged in the

locality for similar legal services; (4) the amount involved and the results obtained; (5) the time limitations imposed by the

client or by the circumstances; (6) the nature and length of the professional relationship with the client; (7) the experience,

reputation, and ability of the lawyer or lawyers performing the services; and (8) whether the fee is fixed or contingent.

...

(c) A fee may be contingent on the outcome of the matter for which the service is rendered, except in a matter in which a

contingent fee is prohibited by par. (d) or other law. A contingent fee agreement shall be in a writing signed by the client, and

shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the

lawyer in the event of settlement, trial or appeal; litigation and other expenses to be deducted from the recovery; and whether

such expenses are to be deducted before or after the contingent fee is calculated. The agreement must clearly notify the client

of any expenses for which the client will be liable whether or not the client is the prevailing party. Upon conclusion of a

contingent fee matter, the lawyer shall provide the client with a written statement stating the outcome of the matter and if

there is a recovery, showing the remittance to the client and the method of its determination.

c. Conclusion --

1. Client's wishes are paramount. See SCR 20:1.16. If client wants

the leaving lawyer as his/her lawyer, then the old firm needs to accept that. Of course, the leaving

Page 3 of 3

lawyer AND his/her new firm is not going to take the case unless they are fairly compensated for the

additional work.

2. Negotiate a method of splitting.

a. consider hiring an expert to value the cases at the time

of dissolution

b. mutually agree to a standard percentage depending on

the status of the case (See our "Case Status Percentages" and

"Clients Percentages as of 6/30/2010"

III. Other Considerations

a. Reduce all to Writing

1. Dissolution Agreement b/t Old firm, leaving partner & his/her new firm, if

applicable.

2. Termination letters to leaving associates and other staff.

3. Create a new Partnership Agreement for the New Partnership.

4. For clients who remain, new contingency fee agreements (SEE 20:1.5 (c).)

b. If leaving partner goes to a different firm, he/she still has an interest up to date of

dissolution in old firm's percent in contingency fee cases, so a "split" in fees needs to be determined.

(See our Settlement Agreement).

c. Notify your Malpractice Carrier and update status-coverage and premiums maybe

impacted.

a. new firm name

b . attorneys added or lost

c. new practice areas OR practice areas lost

d. Notify firm's accountant, so that the proper allocations of profits, losses and deductions

are applied between the your old firm and new firm.

e. evaluate bad account receivables to determine write offs of costs (fees cannot be

written off). (Note: if an uncollectible cost that was used as a deduction is subsequently collected, it

now becomes income.)

f. change your new firm name where ever it is held out to the public: state bar,

Martindale Hubbell, website, advertising, etc..

Case Status Percentages

Initial client meeting/contract signed: 22.5%

Records requested and in 27.0%

Permanency report received 30.0%

Demand sent 35.0%

Suit filed/served 50-55%

Discovery completed 60.0%

Mediation set up 65.0%

Mediation completed 75.0%

Trial preparation completed 85.0%

Trial completed 95.0%

Appeal 100%

Dear Client, We are writing to advise you that Christopher Stombaugh, Matthew Allen and Tyler Kieler have made the decision to withdraw from Kopp, McKichan, Geyer, Skemp and Stombaugh, LLP effective June 30, 2010. We are notifying you at this time so that you may make an informed decision about your legal representation. The law firm of Kopp, McKichan, Geyer & Skemp, LLP stands ready to continue your representation, as do Attorneys Stombaugh, Allen, and Kieler, who will be located at ________________ and associated with Laufenberg Law Group, SC. We wish to inform you that your file remains your property and you may elect to have your case remain at the firm, to transfer your file to attorneys Stombaugh, Allen and Kieler, or to choose other representation altogether. No matter what you choose, you have our assurance that we will do all we can to ensure that your case continues to proceed smoothly. We ask that you make an election at the foot of this letter and return your choice to us in the enclosed envelope so we can prepare accordingly. As always, should you have any questions, feel free to call or email either Attorney Stombaugh at Chriss@kopplaw.net. or attorney Michael Olds at michaelo@kopplaw.net. Sincerely, (signature blocks for all partners.) Election of continued representation __I choose for my case to remain at Kopp, McKichan, Geyer & Skemp, LLP __ I choose to have Mr. Stombaugh/ Mr. Kieler take my case __ I will be seeking other counsel; please give me my file